Abstract
Against the backdrop of Covid-19, we study the effectiveness of public policies typically employed to fight an epidemic. We extend the compartmental SIR model to explore the trade-offs which govern individual behavior. Our stylized model allows for a closed form analysis of vaccination and lockdown policies. We establish Peltzman effects: as policies lower the risk of infections, people become more socially active, which—in turn—undermines their effectiveness. We detect patterns in data for both US states and countries in Western Europe that are consistent with the notion that such effects are shaping actual infection dynamics to a considerable extent.
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Acknowledgements
We thank an anonymous referee, Gregor Jarosch, Stefan Kohler, Dominik Papies, Klaus Prettner and the editor, Nicholas Yannelis, for insightful discussions and comments. The views stated in this paper are those of the authors and are not necessarily those of Danmarks Nationalbank or the European System of Central Banks.
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Dietrich, A., Kohler, W. & Müller, G. Pandemics, public policy, and Peltzman effects. Econ Theory 79, 889–910 (2025). https://doi.org/10.1007/s00199-024-01605-5
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DOI: https://doi.org/10.1007/s00199-024-01605-5